How to Increase Rents without Increasing Vacancies

By Jacob Lundquist

Rent increases are a difficult subject. On the one hand, property managers want to make money and compensate for local taxes and other fees. On the other hand, residents do not want to have to pay more money, and often do not understand the reasons for increases. When owners decide on an increase, the decision ought to come after specific cost-benefit analysis that uses data on regional rents and relative tenant acceptance.

Whether or not an individual tenant will accept a rent increase without leaving generally depends on their happiness, dedication to the property, and interactions with maintenance or management staff.

A resident’s likeliness to stay also depends on local, comparable rates. If the apartment block down the street costs hundreds of dollars less for the same room and amenities, tenants will likely just look elsewhere. Make sure your rents are at comparable rates based on neighborhood values. Consider questions regarding relative demand.

Part of resident’s responses to rent increases will also depend on the manner in which they are communicated. Professional, timely, and clear communication can go a long way in this regard. Let the tenant know, as early as possible, that the next year’s rate will increase. Include, if you wish, an FAQ sheet that explains exactly what is occurring and why. Personally established relations with residents, as mentioned above, will also make the news far easier to deliver.

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